Commission to focus on BAA service

9 August 2007

The UK’s Competition Commission has indicated that it will focus on the service level currently provided by BAA as it looks into restrictions on competition in the UK airport market.The Competition Commission has published an issues statement as part of its
investigation into the supply of airport services by BAA in the UK. BAA owns seven airports:
Heathrow, Gatwick, Stansted, and Southampton in England; and Edinburgh, Glasgow and
Aberdeen in Scotland.
The statement follows the initial process of information gathering, including visits to airports
and holding hearings with interested parties. It identifies the key questions being addressed.
The Office of Fair Trading (OFT) made the reference to the CC on 29 March 2007. The CC
will now determine whether there are any features of the market that prevent, restrict or
distort competition and, if so, what remedial action might be taken.
Christopher Clarke, Inquiry Group Chairman and CC Deputy Chairman said:
We have already collected extensive evidence from a wide range of parties
including BAA itself, the CAA, the OFT, airlines and industry bodies, other
providers of services to the airports, consumer and business groups, as well as
government in both England and Scotland.
We are well aware of the concerns expressed in the media and elsewhere over
the operations of BAA’s airports, especially Heathrow, Stansted and Gatwick.
These include delays experienced by passengers going through security or
immigration, as well as the availability of facilities such as lifts, escalators and
travelators, and other aspects which may affect passengers’ experience passing
through airports, such as overcrowding, signage and cleanliness.
Our task is to seek and assess the evidence on all aspects of the seven airports
relevant to a competition inquiry. We are therefore looking carefully at a wide
range of issues, many of which are complex and interrelated as will be readily
apparent from today’s detailed statement. Some may be short-term but given the
nature of airports, others involve much longer timescales stretching over the next
10 or 15 years.
We are looking at how common ownership could affect BAA’s incentives both to
invest in and develop its airports, and operate them. We are particularly assessing how the quantity, specification, quality, location and timeliness of
capital expenditure, ranging from capacity to security, might be affected by
common ownership. Similarly, in terms of operations, we are examining how it
might affect incentives to improve operating efficiencies as well as levels of
service, including recently, and most notably, security.
We are also considering the consequences of the airports’ regulatory regime
which is very different from most other regulated industries. In addition, we are
assessing the impact of restrictions on airport development and constraints on
capacity in terms of runways, terminals, other facilities, and airspace for planning
or other reasons.
The purpose of the statement is to share our current thinking on what issues we
are addressing and to provide the opportunity for interested parties to submit
new or further evidence. At this stage, we have no preconceived ideas of what
our conclusions might be; and if we were to identify competition problems, what
the appropriate remedies might be. It is much too early for that. Our next stage is
to analyse and assess all of the evidence and following further hearings, we
expect to publish for consultation in the early part of 2008 a document setting out
our ‘emerging thinking’ on all the key issues. We currently aim to reach our
provisional findings around this time next year.——-